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The UBS YES Strategy: What Went Wrong

May 7, 2021 Blog

High-net-worth investors have lost millions of dollars with the UBS yield enhancement strategy (YES). While UBS brokers sold the YES strategy as a stable investment with relatively low risk, the nature of the strategy is such that it leaves investors with little hope of recovering their losses through market forces when things go wrong. As we now know, things went very wrong with the UBS YES strategy starting in 2018.

3 Factors that Led to UBS YES Strategy Investors’ Losses

Through investigations and arbitration before the Financial Industry Regulatory Authority (FINRA), we now know precisely why many high-net-worth investors suffered substantial losses with the UBS YES strategy. Ultimately, it boils down to three main factors:

1. UBS Brokers Failed to Properly Disclose the Risks Involved

First, UBS brokers failed to properly disclose the risks involved. The UBS YES strategy relied on a complex series of investments in naked options. When the strategy worked as it was supposed to, investors would let these options expire and then collect an option premium. Theoretically, investors could do this over and over again; and, over time, this would help to increase the value of their portfolios (or “enhance” their “yield”).

As with most types of investments, the more investors put in, the more they stood to profit. By pitching the “low risk” nature of the UBS YES strategy, the firm’s brokers convinced many of their clients to invest millions.

2. The Underlying Assumptions of the YES Strategy Failed

Second, the supposed “low risk” nature of the UBS YES strategy was premised on the assumption that the market would remain relatively stable over time. Effectively the yield enhancement strategy involved placing a bet (or, more accurately, multiple bets) against market volatility. While this worked for a time, when the market became unstable in 2018—and when this instability continued into 2019 and 2020—the underlying assumptions of the UBS YES strategy failed.

3. UBS Brokers Continued to Recommend the YES Strategy

Third, despite the failure of the YES strategy’s underlying assumptions, UBS brokers continued to recommend the strategy to their high-net-worth clients. Investigations have pointed to two primary reasons why.

In some cases, it seems that UBS brokers did not understand the risks associated with the strategy. Or, if they understood these risks, they did not understand what was happening in the market. In other cases, it appears that UBS brokers understood what was happening but continued to recommend the strategy so that they could continue earning commissions on the naked option sales. In all cases, these issues led to UBS brokers making unsuitable investment recommendations—and investors are now using this as a basis to recover their fraudulent UBS YES strategy losses.

Talk to a Lawyer about Your UBS YES Strategy Losses

Have you suffered substantial losses with the UBS YES strategy? Our lawyers are actively representing YES strategy investors nationwide in arbitration against UBS. Call 212-742-1414 or contact us online to speak with a lawyer about your case in confidence.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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